The government is not considering any rollback of the proposed 0.4 per cent Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions above Rs 2,000, government sources told PTI on Wednesday.

A senior official, responding to questions on whether the MDR charge, scheduled to take effect from October 15, could be withdrawn, said the decision had already been taken and there was “no question of reversing it”, PTI reported.

According to government sources, the move has been introduced in the broader interest of the UPI ecosystem, particularly to strengthen its safety and security. They said the decision to levy MDR, a practice followed in several other countries, was taken when the UPI system was introduced in 2020. The new framework, they added, is aimed at making UPI financially self-sustainable.

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The move has faced opposition from traders, shopkeepers and political parties, with critics referring to it as the “Modi Tax”. Some Opposition parties, including the Congress, have also alleged that Prime Minister Narendra Modi gave in to pressure from the US.

The government on Tuesday defended the decision, saying incentives would be provided to encourage further expansion of UPI in rural and semi-urban regions while preserving its competitiveness. It also maintained that the vast majority of payments would continue to remain free.

The Parliamentary Standing Committee on Finance had earlier raised concerns about the sustainability of the zero-MDR model. In its 32nd report, the panel said the regime “puts pressure on government finances” and warned that “establishing a viable revenue mechanism is critical to ensuring the UPI ecosystem achieves financial sustainability without perpetually straining the government exchequer”.